A presentation on

NON PROFIT
ORGANISATION
 INTRODUCTION

The basic aim of every organization is to earn profit. When

a business man establishes an enterprise, whether sole
proprietorship, partnership or a joint stock company, his
main aim will be to generate maximum profit.
But there are some organizations which are established not
profit but for some other purposes; they are popularly
known as Non-Profit Organizations (NPOs).
The main objective of such Organizations is to render
services at reasonable rates and prices. The very reason for
their existence at reasonable rates and prices.
 The very reason for their existence is to provide services to the
people and non to maximize the profits. Such Non Profit
Organizations are not owned by individuals but group of
people contributing its finances whenever needed, often
owned by trusts.
These organizations are not allowed to earn supernormal
profits but whenever there is excess of income over
expenditure it again is to be used for the welfare of the society.
Following are the examples of such organization.
Educational institutes
Libraries
Hospitals
Sports Clubs
Religious organizations and many more.
 In spite of the fact that it does not earn profits or
excess returns, such a form is supposed to maintain
accounts.
They do not have to maintain purchase books or
sales books, but they do maintain cash book and
prepare other necessary accounts. Such accounts are
then to be submitted in annual general meeting. Its
final account consists of : 1. Receipt and payment
accounts, 2. Income and expenditure account and 3.
Balance sheet. It receives its income by charging for
goods and services, donations, charities etc.
 CHARACTERISTICS

Objective :-Ultimate aim of an NGO is to offer services

to its members or to the society. They are concerned with
the welfare of the society. They do not charge excess
amount for their products or services. So such products
are available at concessional rates.
Nature of goods or services :-Normally, they deal in
providing services rather than any tangible goods. The
examples of such services can be well quoted as
hospitals, pathological labs, sports clubs etc.
Measurement of Success :-When there is no physical
product, the efficiency and effectiveness is measured not
in terms of quality of physical output, but in the terms of
consistency, speed, reliability and quality of services
offered.
 Revenue Collections :-To cover the mandatory costs,
the organization receives revenues in the form of fees,
grants or donations from members. At times they receive
grants from governments also.
Promotion and Publicity :-Now-a-days, these firms
have to promote themselves in order to survive in the
market. They have to adapt to various advertisements in
different media to attract customers and have to build up
goodwill to get more popularity.
Accounting Policies and Procedures :-The
accounting procedure is not as vigorous as that of a
company form but they are supposed to present
necessary accounting information to their donors,
members and the Government.
 MERITS

Non Profit Motive :The problems that are created in order to generate or
achieve targeted profits in other businesses are eliminated outright. These
enterprise do not have any profit motive. They are here to serve members
and people at large. This is the greates benefit provided by these kinds of
enterprises to the society.
Social Welfare :Another advantage of these kind of firms is that they
operate to provide 7various facilities to society. They are here to serve
society and thus, people do have trust in them. Their main aim is to look for
the betterment of the members and society at large.
Easy Formation :These kinds of organizations are easy to form without
much formalities and time consumption.
Efficiency :As the main aim of these types of organizations is not earn
profit but to serve society, they try to acquire trust of the members or
public. In order to generate and retain trust of the society and build up
goodwill, they try to work as efficiently as possible.
 Limited Liability :The liability of the members is limited to the
amount of capital contributed by them.
Flexibility :The external environment or the factors does not affect
these organizations as them main aim is to provide service to the
society and not to generate profit at any cost. Thus, the operations are
flexible and adaptable. They can easily incorporate the changes and
alter the policies and services as and when required so as to improve
their operations. They have full autonomy.
 DEMERITS

Inadequate Finance : Due to social welfare as the main objective,

the investors are reluctant to invest their funds in these kinds of
enterprises. The organization has to depend on fees and marginally
on donations and grants. From the fees and few grants, they have to
cover their total costs of operations.
Uncertain Existence :The possibility of survival or success of
these kinds of enterprises depends on public/society preferences
and adaptability. If the services provided by the firm are good and
qualitative, and most importantly, targeting the exact needs of the
public or members, then it has a chance to proper otherwise it will
have to face tough times.
Weak Management :As the employees working in the firm do not
have any chance to grow, they do not take personal interest, at
times, in the activities of the firm. Due to lack of personal interest,
weak managerial talent and initiatives, management of the unit is
not strong and thus, suffers from effective decision making
deficiency.
 Non-cooperation :In NPOs, all the members have
equal voices in the management. This creates chaos
and leads to unnecessary bickering of members.
Gradually this creates resistance and friction amongst
the members and end up with bitter experiences and
poor management.
Lack of Secrecy :Because all problems, new policies
and other managerial aspects are to be dealt after
consulting with members, it becomes difficult to
maintain secrets with such NPOs.
 As discussed earlier, an NGO may be incorporated for reasons other than
profit. They are meant to benefit its shareholders and society at large non-
financially. Certainly, these NGOs generate income but are used only for
fulfilling the NGOs objectives and contribute in the development of society.
Health and Public Awareness :They participate in different kind of health
awareness programs like awareness and treatment programs of deadly diseases
like Tuberculosis, Malaria, HIV/AIDS, leprosy etc. They work on eradication
and immunization of each of such diseases, spreading consciousness about it
and how to fight and be cautious with each of such diseases. Apart from that,
they also work on projects like building wells for safe drinking water, building
community toilets for proper sanitation, cleanliness programs etc.
Upliftment of women and children :Women and children are often
victims of various social abuses like human-trafficking, rape, domestic violence
etc. These NGOs spread awareness pertaining to the rights of women and
children. Not only that, they undertake different campaigns like anti-
trafficking, ending ruthless punishments in school, generating employment for
women through art and handicraft industry etc.
 Development of rural areas : Often it has been noticed that the
resources distributed by Government for development of rural areas
have been aided by NGOs too. They work on development of rural
areas so that the resident of a particular region does not have to
migrate to cities in search of a better living. Literacy campaigns,
employment generation, training people in rural areas, arranging
medical camps, educating them about their rights and privileges etc.
are a few remedial actions that can change the scenario in rural
areas and thus provide better facilities in rural areas.
Awareness and Preservation of Forests and Wildlife :In
order to restore the environmental balance and preserve wild life,
several NGOs work with the objective of conservation of forests and
wildlife. They organize different tracking and expedition camps,
photography exhibitions, informational sessions, expert talks etc. to
preserve the wildlife and forests and thus explaining its importance
for survival of human beings on earth.
 Rehabilitation :Various NGOs equip and train themselves
to help the society rehabilitate in other places during the time of
natural calamities like earth quakes, floods, droughts, volcanic
eruptions, cyclones etc. where people have to move to safer
places.
Apart from the above mentioned, NGOs also work for
rehabilitation of people addicted to drugs and alcohol. They have
special rehabilitation centers build where addiction free
campaigns are arranged and thus, improving the lives of such
addictives and people around them.